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- The latest 5% rebound seen within the AUD/USD from its 3 February low is prone to be a minor corrective rebound.
- The medium-term downtrend part of the AUD/USD in place since its 30 September 2024 excessive of 0.6943 stays intact.
- Watch the 0.6215 potential draw back set off stage of the AUD/USD.
RBA’s Much less Dovish Stance and China’s Stimulus Are Making a Flooring
The Reserve Financial institution of Australia (RBA) has been reluctant to enter an easing cycle after its latest “hawkish reduce” steerage on 18 February the place it slashed its money coverage rate of interest by 25 foundation factors (bps) to 4.1%.
Regardless of its first-interest fee discount since November 2020, RBA Governor Bullock has poured “chilly water” to mood down market expectations of additional fee cuts throughout her press convention attributable to labour market tightness in Australia.
After the conclusion of China’s Nationwide Folks’s Congress in early March, prime policymakers have signalled extra upcoming stimulus measures to jumpstart home consumption in China which can also be Australia’s largest buying and selling companion.
Therefore, additional stimulus measures from China to offset potential aggressive commerce tariffs from the US could enhance China’s imports from Australia, in flip, making a flooring on the AUD/USD.
Weak Momentum and Narrowing of AU-US Sovereign Yield Unfold
Fig 1: AUD/USD medium-term pattern with 2-year AU-US sovereign yield unfold as of 24 Mar 2025 (Supply: TradingView)
Within the lens of technical evaluation, the 4 weeks of up transfer seen on the AUD/USD from its 3 February low of 0.6088 is probably going a minor corrective rebound sequence inside its medium-term downtrend part that’s nonetheless in progress because the 30 September 2024 swing excessive of 0.6943.
The day by day RSI momentum indicator broke under its ascending trendline assist final Thursday, 20 March, and breached under the 50 stage which suggests an absence of upside momentum.
As well as, the shorter-term 2-year yield unfold between Australian government bonds and US Treasury notes (additionally can be utilized as a gauge to measure the relative distinction between financial coverage stances of RBA and Fed) has began to slim once more after it printed a decrease excessive on 20 March to hit -0.25% right now of the writing from-0.12% on 10 March (see Fig 1).
Watch the 0.6400 key medium-term pivotal resistance on the AUD/USD and a break under the 0.6215 intermediate assist (additionally the ascending trendline from 13 January) could set off the beginning of one other potential impulsive down transfer sequence to retest 0.6120 earlier than the following medium-term assist is available in at 0.6030/0.5990.
Then again, a clearance above 0.6400 invalidates the bearish state of affairs for a restoration in the direction of the following medium-term resistance at 0.6540 (additionally near the 200-day transferring common).
